The South Korean economy saw its manufacturing activities falter, boosting expectations for new economy-boosting policies under the top economic policymaker who will take office soon, a government report showed Tuesday.
"Our economy maintained stable consumer prices and employment, but industrial activity reduced for the second straight month in May amid a sharp fall in activity in the manufacturing and mining sectors," the finance ministry said in its monthly economic assessment called Green Book.
The dim assessment was in line with comments made by Choi Kyung- hwan, nominated as Deputy Prime Minister and Finance Minister.
Choi said at the parliamentary confirmation hearing that he planned to boost the faltering domestic market by easing the housing market regulations such as the loan-to-value (LTV) and debt-to-income (DTI) ratios.
Choi said the economy is now in a bad shape enough to require the supplementary budget plan, heralding new economy-boosting policies, but he noted the extra-budget scheme will not be necessary for the time being.
Choi will take office after the hearing. The parliamentary confirmation is a ceremonial event in the country as the cabinet members cannot be vetoed by lawmakers except for the prime minister.
The ministry said the economic recovery remained sluggish amid weak investment and private consumption that had yet to see full recovery, noting the economy was facing several external risks such as the tapering of the U.S. quantitative easing, uncertainties in emerging economies and the weak trend of the Japanese yen.
Production in the manufacturing and mining industries shrank 2. 7 percent in May after falling 0.1 percent in April. The consecutive falls were attributed to less business days and lackluster exports.
Retail sales, which were hit hard by the deadly ferry disaster, increased 1.4 percent in May, rebounding from a 1.6 percent reduction in the prior month.The ferry Sewol capsized and sank off the southwestern coast on April 16, leaving more than 300 people, mostly high school students, dead or missing.
Production in the service industry rebounded from a 1.2 percent fall in April to a 0.6 percent growth in May.
Facility investment declined 1.4 percent in May after rising 2. 4 percent in the prior month, and investment in the construction sector plunged 6 percent in May, down from a 6.9 percent gain in April.
Consumer prices rose 1.7 percent in June from a year earlier, unchanged from the prior month and staying in the stable level.
The number of people employed increased 413,000 in May from a year earlier, down from a 581,000 expansion in April.
Exports, which account for about half of the economy, gained 2. 5 percent in June from a year earlier after falling 1 percent in May. .